What is Bitcoin?
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I. 2a – What is Bitcoin?
Bitcoin is the first ever cryptocurrency, supported by the first ever blockchain.
It was created in 2008 by person(s) unknown named Satoshi Nakamoto, shortly after they published an academic journal article entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’. This article not only put forward the idea of cryptocurrency, but also detailed exactly how a blockchain would work. It is Nakamoto’s paper that introduced blockchain technology to the world.
In order to understand Bitcoin, it is important to know why it was created and where it came from. Continue reading and we’ll take you through all the details you need to know, before moving on to explaining how Bitcoin works, how you can buy it instantly, and how you can use it today.
II. 2b – Who or what created Bitcoin?
Nobody knows for certain. In 2008 an academic journal article was published called ‘Bitcoin: A Peer-to-Peer Electronic Cash System’, with the author listed as Satoshi Nakamoto. Nakamoto was also responsible for writing the code of the Bitcoin blockchain and creating its first ever ‘block’ of transactions.
There has been an enduring mystery about who this person is, or whether it is in fact (as many believe) a pseudonym for a group of people. Despite many attempts to uncover the truth, and a few individuals coming out in public professing to be Satoshi Nakamoto, the identity of the person(s) behind Bitcoin still remains a mystery.
III. 2c – Why was it created?
There are many potential reasons for this, but the event that certainly did most to influence the creation of Bitcoin was the 2008 financial crash. On the first block of the Bitcoin blockchain (the ‘Genesis block’), Satoshi Nakamoto cited an article from The Times titled ‘Chancellor on brink of second bailout for banks’.
It appears that Satoshi Nakamoto’s creation of the first Bitcoin block was a direct response to their own unhappiness with the global financial system in the wake of the crash. Through the creation of a whole new form of decentralised currency, the immense power of ‘too big to fail’ banks could be challenged.
IV. 2d – Who owns the Bitcoin blockchain?
No one owns the Bitcoin blockchain. The nature of a blockchain is to be decentralised, which means that no one person, group, or entity controls it.
On a technical level, the Bitcoin blockchain is a form of open-source software, meaning that it is controlled by its users, who vote on any proposed changes to the code through direct democracy (like the football game with no referee in section 1a). People can freely look at the source code of the blockchain and suggest edits to it, but updates require an ‘economic majority’ to be successfully incorporated.
Just like any app on your phone, updates are made to the blockchain to help it work more efficiently, increase security, or any other improvements it may need. However, when updating an app, it’s the company that owns it that will decide and enact the updates; with Bitcoin, only updates that the majority of users agree to are implemented.
This democratic approach to the management of Bitcoin is not only what sets it apart from the global banking system, but is also a core component of how Bitcoin works.
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